Monetary Macro CIO Joseph Wang gives insight into the aftermath of Silicon Valley Bank’s fall on “Making Money with Charles Payne”.
The Federal Reserve Board said Monday vice chairman for oversight Michael S. Barr will lead a review of oversight and regulation at the Silicon Valley bank, which collapsed last week after investors withdrew billions in a matter of hours.
“Events surrounding Silicon Valley Bank require a thorough, transparent and expeditious review by the Federal Reserve,” Chairman Jerome Powell said in a statement.
A sign for Silicon Valley Bank (SVB) headquarters is seen March 10, 2023 in Santa Clara, California. (Portal/Nathan Frandino/Portal photos)
President Biden nominated Barr, a former official in the Obama and Clinton administrations, in April 2022 after the failed nomination of Sarah Bloom Raskin.
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“We must be humble and conduct a careful and thorough review of how we have overseen and regulated this firm and what we should learn from that experience,” Barr said in a statement.
Barr’s review will be published by May 1st.
Savers withdrew savings and investors largely sold bank stocks on Monday as the federal government rushed to reassure Americans that the banking system was safe after two bank failures, stoking fears more financial institutions could fall.
President Joe Biden insisted the system was secure after the second and third largest bank failures in the country’s history occurred in 48 hours. In response to the crisis, regulators guaranteed all deposits at the two banks, creating a program that effectively gave other banks a lifeline to protect them from a deposit rush.
FDIC member Dedra Dorn (center left) speaks to people in line outside Silicon Valley Bank’s headquarters in Santa Clara, California on Monday, March 13, 2023. (AP Photo/ Benjamin Fanjoy/AP Images)
“Your deposits will be there when you need them,” Biden told the public, trying to project calm. He also said bank executives responsible for the defaults would be held accountable.
Regulators shut down Silicon Valley Bank on Friday after depositors withdrew their funds at once. The only major failure in US banking history was the collapse of Washington Mutual in 2008. New York-based Signature Bank also collapsed in the third largest bankruptcy in the US
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In both cases, the government agreed to cover deposits, including those that exceeded the $250,000 federally insured limit.
The Associated Press contributed to this report.